City correspondence details alleged defaults of downtown developers

A notice from the city to the downtown developers in Village River Group details how the mixed-use project had fallen behind schedule and how developers had failed to show proof they could finance it.

On April 1, the city sent Village River Group, which includes Jeff Lamont, Larry Canfield, Paul Cink and Norm Drake, notice that it was not in compliance with several parts of the development agreement governing the project.

The group was given 30 days to remedy the defaults or face the termination of the agreement. On Tuesday, the city provided notice of that termination to the developers.

In its correspondence, the city noted that Village River Group was required to begin phase one improvements on its development when general contractor Journey Group was ready to proceed.

Village River Group did not issue a notice to proceed, so materials for subcontractors could not be ordered, the city said. There also was no approved scope of work for the project and no evidence of financing in place for the private development, the city said.

Without a notice to proceed, Journey then instructed its subcontractors to stop work on the private improvements.

The city then repeated several stipulations of the development agreement that required certain actions from the developer before phase one improvements could start. Those included a detailed cost breakdown, proof of financing and an executed payment bond and performance bond, which would have been executed by Journey.

None of those conditions had been fulfilled as of April 1, it said.

The letter also notes previous correspondence from Journey to VRG and the city in February in which Journey said the “developer did not have financing in place when needed to proceed with phase one of the private improvements, and there has been no subsequent showing by developer that it has sufficient capital or the financing to proceed with its obligations under the development agreement.”

In a statement issued Wednesday, Village River Group said it “provided formal responses on three occasions indicating that it did not agree that a default existed and also provided details showing that the project would still be completed on time and as initially scheduled as per the development agreement.”

The city’s correspondence with Village River Group does not detail what additional incentives could be made available to the developers, although Lamont has said a property tax incentive and business improvement district were offered.

“Please note that the incentives or concessions sought by developer from the city and other sources are not conditions which excuse performance under the terms of the development agreement,” the city’s notice said.

“Moreover, developer should not rely on any discussions that may have occurred or may occur in the future between the city and developer respecting any further incentives or concessions unless and until a binding, written agreement has been fully executed by and between the parties concerning such incentives or concessions.”

On Tuesday, the city sent Village River Group a notice of termination, citing what it called a material breach of the development agreement.

“Over the past several weeks, the city has met with developer and developer has proposed a change to the scope of the project. The city has reviewed and considered developer’s offer and proposal. The city hereby rejects developer’s offer and proposal. The city finds that the change in scope and revised milestones proposed by developer do not comply with the development agreement and are a material departure from its terms and conditions. The city has consistently insisted that developer satisfy the terms and conditions of the development agreement. Developer has not done so.”

After releasing its statement Wednesday, Village River Group said it would not comment further because of the legal action underway.